Podcast
Podcast
Podcast
Something went wrong
Questions and Answers
Questions and Answers
What is loss aversion?
What is loss aversion?
- The tendency of people to respond equally to gains and losses
- The tendency of people to ignore both gains and losses
- The tendency of people to respond more strongly to losses than equivalent gains (correct)
- The tendency of people to respond more strongly to gains than equivalent losses
Who first proposed loss aversion?
Who first proposed loss aversion?
- Milton Friedman and Friedrich Hayek
- Richard Thaler and Cass Sunstein
- Amos Tversky and Daniel Kahneman (correct)
- John Maynard Keynes and Paul Samuelson
What is the endowment effect?
What is the endowment effect?
- People place a higher value on a good if it is more expensive
- People place the same value on a good regardless of whether they own it or not
- People place a higher value on a good that they do not own than on an identical good that they own
- People place a higher value on a good that they own than on an identical good that they do not own (correct)
What is loss attention?
What is loss attention?
What is the out of pocket phenomenon?
What is the out of pocket phenomenon?
What is expectation-based loss aversion?
What is expectation-based loss aversion?
What is the neural aspect of loss aversion?
What is the neural aspect of loss aversion?
What is the relationship between loss aversion and age?
What is the relationship between loss aversion and age?
What is the loss of striatal dopamine neurons associated with?
What is the loss of striatal dopamine neurons associated with?
Questions and Answers
Something went wrong
Flashcards
Flashcards
Loss Aversion
Loss Aversion
The tendency to feel the pain of a loss more strongly than the pleasure of an equivalent gain.
Prospect Theory
Prospect Theory
A theory that loss aversion is a key component. It explains how people make decisions when faced with risk and uncertainty.
Endowment Effect
Endowment Effect
The tendency to value something more simply because you own it.
Loss Attention
Loss Attention
Signup and view all the flashcards
Loss Arousal
Loss Arousal
Signup and view all the flashcards
Expectation-Based Loss Aversion
Expectation-Based Loss Aversion
Signup and view all the flashcards
Out-of-Pocket Phenomenon
Out-of-Pocket Phenomenon
Signup and view all the flashcards
Neural Aspect of Loss Aversion
Neural Aspect of Loss Aversion
Signup and view all the flashcards
Exploiting Loss Aversion
Exploiting Loss Aversion
Signup and view all the flashcards
Flashcards
Something went wrong
Study Notes
Study Notes
Loss Aversion Theory:
-
Loss aversion refers to how people respond more strongly to losses than equivalent gains.
-
Losses can be twice as powerful, psychologically, as gains.
-
Loss aversion was first proposed by Amos Tversky and Daniel Kahneman as an important framework for Prospect Theory.
-
Loss aversion is part of prospect theory, which is a cornerstone in behavioral economics.
-
The endowment effect is explained by loss aversion - people place a higher value on a good that they own than on an identical good that they do not own.
-
Multiple studies have questioned the existence of loss aversion.
-
Loss attention refers to the tendency of individuals to allocate more attention to a task or situation when it involves losses than when it does not involve losses.
-
Loss attention is consistent with several empirical findings in economics, finance, marketing, and decision making.
-
Loss attention is more robust than loss aversion.
-
Loss arousal is a phenomenon where individuals display greater Autonomic Nervous System activation following losses than following equivalent gains.
-
Loss aversion is often applied in the fields of finance and insurance.
-
Loss aversion has been used to explain many phenomena in traditional choice theory.Loss Aversion: A Detailed Summary
-
The out of pocket phenomenon shows that people are more motivated to avoid losing personal resources than gaining equivalent resources.
-
Marketing studies indicate that products with minor negative features highlighted are perceived as more attractive.
-
Capuchin monkeys also exhibit the same propensity to avoid perceived losses demonstrated by human subjects and investors.
-
Expectation-based loss aversion is a phenomenon in behavioral economics where individuals lose an amount of utility from the lack of experiencing fulfillment of their expectations.
-
Loss aversion experimentation has been applied within an educational setting in an effort to improve achievement.
-
Neural aspect of loss aversion can be measured using functional magnetic resonance imaging (fMRI) to investigate whether individual variability in loss aversion is reflected in differences in brain activity through bidirectional or gain or loss specific responses.
-
Multiple neural mechanisms are recruited while making choices, showing functional and structural individual variability.
-
Individual differences in loss aversion are related to variables such as age, gender, and genetic factors affecting thalamic norepinephrine transmission, as well as neural structure and activities.
-
Adolescents and adults are found to be similarly loss-averse on the behavioral level but they demonstrated different underlying neural responses to the process of rejecting gambles.
-
Loss of striatal dopamine neurons is associated with reduced risk-taking behavior.
-
Acute administration of D2 dopamine agonists may cause an increase in risky choices in humans.
-
Loss aversion can be exploited in the pursuit of both optimal public policy and the pursuit of profits.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Study Notes
Something went wrong
